Texas strip club fee judge suggests conflict of interest

Published 6:00 pm, Monday, February 4, 2008

A court hearing on Texas' new $5 strip club fee halted abruptly Tuesday when the presiding judge said she may have been present during discussions with legislators about the surcharge.

"I can't hear this case," state District Judge Lora Livingston said. "I don't go to the Legislature often, and when I do I tend to remember, particularly when it has a nickname like the 'pole tax.'"

The case was moved to Judge Margaret Cooper, who heard arguments Tuesday and said she would rule another day on a motion filed by strip-club owners who claim the fee is unconstitutional.

Stewart Whitehead, the attorney for the owners, called the fee an unconstitutional occupation tax that raises money for the state but does not designate a percentage for public schools, as the Texas constitution requires for occupation taxes.

And, he said, it unfairly targets sexually oriented businesses.

"If this fee is a tax, it's not an unconstitutional tax," countered state's attorney Christine Monzingo. She argued that it is not an admissions tax. "It's a fee based on entries."

The Texas Legislature was within its right to impose a per-customer fee on businesses that serve alcohol and offer nude performances, she said.

The fee was approved last year and is projected to raise about $44 million for sexual assault prevention programs and health care for the uninsured.

Livingston said she has past involvement with a group that would receive money from the fee: the Texas Equal Access to Justice Foundation, which provides legal services to the poor.

The judge said she may have been present while some in the foundation discussed it with legislators. Livingston said she should not handle the case even though she did not directly lobby any lawmaker about the fee.

The Texas Entertainment Association and Karpod Inc., owner of an Amarillo strip club, took the case to court.

They were asking the judge Tuesday to make a partial ruling in their favor on the grounds that the fee is an unconstitutional tax. The nude entertainment clubs also argue that the fee could drive them out of business because the surcharge will keep customers away. A trial in the lawsuit is set for March 3.

Monzingo said some of the issues the club owners raised should be addressed at trial.

In December, Judge Scott Jenkins denied a request from owners of the nude clubs to temporarily block the fee from taking effect Jan. 1. The clubs' first payments to the state are due in April.

Attorneys for the state have argued that the fee does not prohibit nude dancing, does not regulate what entertainers wear and does not regulate the businesses in other ways.

The state's attorneys in the lawsuit have tried to suggest there is a link between sexually oriented businesses and sexual assaults.

The clubs sued Texas Attorney General Greg Abbott and Comptroller Susan Combs and initially claimed the surcharge violated their First Amendment rights to free expression. The strip clubs moved away from that free expression claim for Tuesday's hearing.